Abdul Aziz Mohamad JCA:

[1] On 20 April 1988 Gloveline Industries (M) Sdn. Bhd ("Gloveline") and Nanyang Union Sdn Bhd ("Nanyang") entered into an agreement for the sale, supply and installation by Nanyang to and for Gloveline of an E.G. Plant, which was a plant for the manufacture of examination gloves, consisting of one production line comprising, as cl. 2.1 termed them, the "machines and equipment" which were described in a schedule to the agreement. In the High Court, Nanyang sued Gloveline for the balance of the purchase price, and Gloveline, alleging that the plant was defective and incapable of proper operation, counterclaimed for the refund of the partial payment that they had made and for losses that they claimed to have suffered. Nanyang's claim was struck out. After a full trial, Gloveline's counterclaim was allowed, and this gave rise to the present appeal by Nanyang. The learned trial judge, who gave his decision on 12 September 2000, has gone on retirement without preparing his grounds of judgment. So we heard the appeal without the benefit of the trial judge's findings of fact and reasoning.

[2] Since, to our understanding, the plant was the production line, and the production line was the plant, we shall use either the term "plant" or "production line" (or just "line"), according as to which is felt more apt for the context, to refer to the same thing. We shall refer to the "machines and equipment" as "the components".

[3] The production line was to be capable of producing, per hour, 4,500 pieces of rubber examination gloves of the prescribed standard.

[4] Although the agreement was only in respect of one production line, for which the contracted price was USD 305,000, cl. 5 contemplated the installation of another production line. Clause 5.3 provided as follows:

5.3. If after the installation of the First Production [Line] it is found that the Machine is defective and in the opinion of the Buyer it is incapable of proper operation the Buyer shall have the right to refuse to have the Second Production Line installed at the factory and in such a situation the Buyer is entitled to request the Seller to take back the machinery and refund the purchase price to the Buyer.

[5] The first part of cl. 7.2 provided as follows:

7.2. The Seller shall design, construct, supply and install the Machinery and equipment and shall guarantee that the commissioning of each of the two (2) Production Lines are capable of meeting the Production quantity and Quality Targets of E.G. Plant ...

It has not been in dispute that one of Nanyang's obligations under the agreement was to install and commission the production line and that, by the guarantee as to commissioning that they gave under that clause, Nanyang undertook, by the commissioning, to ensure that the production line, as installed, was actually capable of producing, per hour, 4,500 rubber examination gloves of the prescribed standard. For this appeal, we accept the definition of "commissioning" given in a publication called Mechanical Completion Handbook by A. Dynowski (October 2000 Edition) at p. 6, where it is said that the term:

Means the testing and adjustment of an assembly or plant sections and will comprise of Operational testing under real or simulated conditions to ensure that it meets all applicable Rules, Regulations, Codes and Standards and that it fulfils it's(sic) intended duty and ready for start-up.

Installation and commissioning were therefore two different things. Mere installation would serve no purpose if the production line could not function to produce the result that it was agreed it should produce. There must also be commissioning.

[6] Gloveline were to pay for the plant in three instalments: the first, of USD 150,000, when the components of the production line were ready for shipment; the second, of USD 120,000, upon completion of "installation and commissioning of the Machine and equipment" - which effectively meant upon commissioning of the production li